Employees in Service on Day of Retirement Entitled to Revised Pension: Supreme Court

The Supreme Court has allowed a plea filed by two retired employees of the Assam Power Generation Corporation Ltd seeking the benefit of revised pay scales for the purpose of pension, holding that employees who were in service on the date of their retirement cannot be denied the benefit of pay revision merely because they retired on the same day.

A Bench comprising Justice Ahsanuddin Amanullah and Justice K Vinod Chandran restored the order of the single judge of the Gauhati High Court and set aside the judgment of the Division Bench, which had denied the benefit of revised pension to the appellants.

The dispute arose from the interpretation of the Assam State Electricity Board and its Successor Companies Revised Pay Rules, 2017. The appellants had retired on March 31, 2016 and claimed that since they were in service on that date, they were entitled to the benefit of pay revision for the purpose of pension. The respondent corporation contended that the revised pay structure applied only to employees who were appointed and continued in service on or after April 1, 2016 and that those who retired on or before March 31, 2016 were not entitled to revised pension.

Rejecting this argument, the Supreme Court held that it could not be said that employees who were in service on March 31, 2016 were not entitled to the revised pay scales applicable on that date. The Court noted that the 2017 Rules clearly provided for grant of pay revision to all employees who were in service on March 31, 2016 as well as to those appointed on or after April 1, 2016.

The Bench observed that the existence of a provision enabling payment of minimum basic pension to those not entitled to revision did not take away the specific entitlement granted under the Rules to employees who were in service on March 31, 2016. The Court emphasised that the language of the Rules was clear and unambiguous and did not exclude employees retiring on the last day of March 2016 from the benefit of pay revision.

The respondents relied on earlier decisions, including K J George and Others v Chief General Manager, Telecom, BSNL and Another decided in 2008, and Union of India and Others v G C Yadav decided by the Delhi High Court in 2018, against which a special leave petition was dismissed in May 2024. The Supreme Court, however, distinguished these decisions, holding that they were based on the Central Pay Commission framework and the provisos to the Fundamental Rules, which were materially different from the Assam pay revision rules under consideration.

The Bench noted that in K J George, the Court had held that although the benefit of Fundamental Rule 56(a) was conferred, the employee legally retired on attaining the age of 60 years and continuance till the end of the month was only for the purpose of pay and allowances. The present Bench declined to agree with this interpretation in the context of the case before it, observing that Fundamental Rule 56(a) did not provide for such a limited continuance or a deemed severance of the employer employee relationship upon attaining the age of superannuation.

The Court further observed that in G C Yadav, the denial of revision was based on a specific proviso deeming the date of retirement to be the last day of the preceding month when the date of birth fell on the first day of a month. In contrast, the appellants in the present case were admittedly in service on the date the pay revision became applicable.

Referring to the three judge Bench decision in S Banerjee v Union of India decided in 1989, the Supreme Court noted that even where a proviso deemed the date of voluntary retirement to be a non working day, the Court had extended benefits accruing on that date to employees who were in service.

The Supreme Court held that under Fundamental Rule 56(a), an employee who attains the age of superannuation in a given month retires only on the last day of that month. The Rules do not provide that such continuation is merely for the purpose of pay and allowances, nor do they contemplate a legal termination of service on the date the employee attains the age of 60 years.

The Bench further relied on Rule 5(2) of the Central Civil Services Pension Rules, which treats the last day of normal superannuation as a working day for which salary is payable. Applying this principle, the Court held that the appellants were in service on March 31, 2016 and were therefore entitled to the benefit of the revised pay scales introduced by the 2017 Rules.

Accordingly, the Supreme Court directed that the appellants’ pay for the month of March 2016 be fixed in the revised scales and that such revised pay be taken into account for computation of pension. The Court ordered that arrears of pay and pension be paid within six months and directed that the revised pension would commence from February 2026. In case of delay beyond the stipulated period, the arrears would carry interest at the rate of six percent per annum, with liberty to the respondent to recover such interest from officers responsible for the delay.

Case Title: Mukut Das v The Assam Power Generation Corporation Ltd and Others

Bench: Justice Ahsanuddin Amanullah and Justice K Vinod Chandran

Date of Judgment: